GK
ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The current ratio of a company is 2 : 1. Which of the following suggestions would reduce it?
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Issuing new shares
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Paying off a current liability
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Selling off a motor car for cash at a slight loss
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To borrow from money for a short time on an interest bearing promissory note
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Explanation:
Detailed explanation-1: -Improving Current Ratio Delaying any capital purchases that would require any cash payments. Looking to see if any term loans can be re-amortized. Reducing the personal draw on the business. Selling any capital assets that are not generating a return to the business (use cash to reduce current debt).
Detailed explanation-2: -Answer and Explanation: Answer choice B. Cash payment reducing accounts payable.
There is 1 question to complete.